Recent Buy: Reynolds American Inc.

I talked about it and I wrote about it on my blog here just a few days ago. Just as a predicted, the price would be too good to pass up on Reynolds American Inc. That being the case, I had to pick up a few more shares for the Dividend Scythe portfolio. I was able to pick up a total of 17 more shares at $50.11/share which came to a total purchase price of $861.94.

This addition added a sizable amount of projected dividend income to the portfolio. At $1.68 per share in yield, this added a total of $28.56 to the projected annual dividend income. With this addition, the total projected annual dividend income moving forward is a solid $362.92. This should propel the portfolio much further as it will add further capital to future investments and further grow the snow ball.

This acquisition also helped me pass a major milestone. The portfolio is now officially over $10,000! It's taken a little while to get here but it's nice to see it finally hit five figures. I have my increased saving habits and better financial handling skills to thank for this milestone. Without them I would still very likely be in the four figure range and very likely still at the bottom or mid range at that!

I know this isn't a huge milestone compared to some who have been investing for a long time but for me this milestone is huge. It shows that I am capable of making the money add up. I look forward to the newer, bigger snow ball effect that will be seen in the future. Onward and upward is the way to go!

Recent Buy: Reynolds American Inc.

I'm like a kid on Christmas morning this week. My budget finalized, I sold a stock, and I obtained my revenue from SA published articles all in the same week. That means there is moolah (money?) to invest in all that I wish (if only that were really the case)! Therefore I have purchased another holding for the portfolio.

Today's purchase was in Reynolds American Inc. This is the holding company that brought Camel, Newports, and Pall Mall to your friendly neighborhood gas station and Walmart (WMT). They are even responsible for American Spirit (if you smoked that natural stuff). I may no longer be a smoker but I once was and my brand of choice was Camel. Without trying to sound too big on advertisements and plugs, the reason that I chose Camel over the other brands was for the taste and the price in relation to it. The taste was just perfect for the budget that I was looking to buy my smokes for. On the other hand, when I had very little available for smokes, I would reach for Pall Malls. It was no different for all of the friends I hung out with that smoked. Everyone preferred Camels or Pall Malls - not a single one smoked Marlboro. Maybe this was a case of you are who you hang around with but all the same, it all just seemed to depend on how much cash you had at the time of purchase.

I guess what I'm trying to get at is that these two brands alone made up the bag or pocket of almost everyone I met who smoked. After taking a look at the numbers released in both Reynolds American Inc.'s 10-K and Phillip Morris's (Marlboro), it appeared that I was not far off. The two makers comprise almost 100% of the market of cigarettes in the United States. The big difference between the two was that Reynolds American had a far greater profit margin (just above 55%) and their P/E has been on the rise rather than falling. Pair this with a better PEG ratio (1.73 for RAI) and a more comfortable D/E ratio and you've got yourself a better bet in the tobacco industry.

I may not smoke anymore but because I have in the past (a little more than I would care to admit), I have a great background for the product and the market they are trying to appeal to. This gives me a pretty good level of confidence that this will be a good long term investment. Granted, it's definitely not the healthiest or society friendly stock but I believe the company still has quite a future ahead of it and that makes it a good buy for the portfolio. Final compilation below:

Purchased 14 shares of Reynolds American Inc. (RAI) on 5/20/2016 @49.71/share

**This adds $23.52 in annual dividends to the Dividend Scythe